Governance and accountability PAGE 58 Life Healthcare - integrated annual report 2012 CORPORATE GOVERNANCE REPORT The board of directors of Life Healthcare is committed to the principles and practice of corporate governance and is cognisant of the role that corporate governance plays in the delivery of sustainable growth to all stakeholders. The directors regard good corporate governance as critical to the success of Life Healthcare’s business and stakeholder interests, and fundamental to discharging their stewardship responsibilities. The board strives to provide strong leadership, strategic direction and control, and a productive environment that can sustain the delivery of value to the Group’s shareholders. The directors and executive management are committed to applying the principles necessary to ensure that the highest standards of governance and accountability are practised in the conduct of Life Healthcare’s business. These principles include honesty, transparency, integrity, discipline and accountability in the conduct of business. STATEMENT OF COMPLIANCE Life Healthcare is subject to the JSE Listings Requirements, which require that listed companies comply with the recommendations contained in the King III Code of Corporate Practices and Conduct. For the period under review, Life Healthcare has complied with the majority of the recommendations in the King III Code. The following is an explanation for the area where the Group does not fully apply the recommendations contained in the King III Code: Disclosure of remuneration King III recommends that the salaries of the three most highly paid employees who are not directors be disclosed. The Group deems this information to be sensitive and has therefore only disclosed the remuneration of the two executive directors. BOARD OF DIRECTORS Corporate governance within Life Healthcare is managed and monitored by a unitary board of directors and various board sub-committees. The key principles underpinning the governance of Life Healthcare are to ensure that the Group conducts its business as a responsible corporate citizen through the development and implementation of strategies and policies that are integrated into every area of its operations. Board accountability The board sets the strategic objectives of the Group, determines investment policy and performance criteria, and delegates to management the detailed planning and implementation of policies in accordance with the appropriate risk parameters. The board monitors compliance with policies and achievement against objectives by holding management accountable for its activities through quarterly performance reporting and budget updates. It considers issues of strategic direction, large acquisitions and disposals, and approves major capital expenditure and financial statements as well as matters having a material effect on Life Healthcare. Board members are encouraged to debate and challenge issues in an atmosphere of mutual respect and cooperation. The role of the board is regulated in a formal board charter which defines its authority and power. In accordance with its charter, the responsibilities of the board include: acting as a focal point for and custodian of corporate governance; identifying key performance and risk areas; ensuring the Group’s strategy will result in sustainable outcomes; considering sustainability as a business opportunity that guides strategy formulation; approving the Group’s strategy and annual business plans; ensuring that the Group’s ethics are effectively managed; the governance of risk; overseeing of IT governance; assessing the impact of the Group’s business operations on the environment; and approval and adoption of Group policies, programmes and procedures in relation to safety, health, economic, social and environmental impacts, as well as remuneration and benefits. While retaining overall accountability, the board has delegated authority to the chief executive officer to run the day-to-day affairs of the Group. The board has also created sub-committees to enable it to discharge its duties and responsibilities properly and to fulfil its decision-making process effectively. Each committee acts with appropriate terms of reference. Board committees may take independent professional advice at the Group’s expense when necessary. Composition of the board The board comprised 12 directors as at 30 September 2012. The composition of the board included eight independent non-executive directors; two non-executive directors; and two executive directors reflecting an appropriate balance between the executive and non-executive directors. Professor Jakes Gerwel, a non-executive director, is chairman of the board and in line with the King III Code, Trevor Munday is the lead independent non-executive director. Michael Flemming, an executive director, is the CEO. The roles of chairman and CEO are not vested in the same person and there is a clearly outlined division of responsibilities. In compliance with JSE Listings Requirements, non-executive directors do not participate in any share incentive or option scheme of the Group. The names of the directors as at 30 September 2012 as well as their biographical details are set out on pages 22 and 23 of this integrated annual report. No changes were made to the board during the financial year ended 30 September 2012.
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Governance and accountabi l ity
PAG E 58 Life Healthcare - integrated annual report 2012
CORPORATE GOVERNANCE REPORT
The board of directors of Life Healthcare is committed to
the principles and practice of corporate governance and is
cognisant of the role that corporate governance plays in the
delivery of sustainable growth to all stakeholders.
The directors regard good corporate governance as critical
to the success of Life Healthcare’s business and stakeholder
interests, and fundamental to discharging their stewardship
responsibilities. The board strives to provide strong leadership,
strategic direction and control, and a productive environment
that can sustain the delivery of value to the Group’s
shareholders. The directors and executive management are
committed to applying the principles necessary to ensure that
the highest standards of governance and accountability are
practised in the conduct of Life Healthcare’s business. These
principles include honesty, transparency, integrity, discipline
and accountability in the conduct of business.
STATEMENT OF COMPLIANCELife Healthcare is subject to the JSE Listings Requirements,
which require that listed companies comply with the
recommendations contained in the King III Code of
Corporate Practices and Conduct. For the period under
review, Life Healthcare has complied with the majority of the
recommendations in the King III Code. The following is an
explanation for the area where the Group does not fully apply
the recommendations contained in the King III Code:
Disclosure of remuneration
King III recommends that the salaries of the three most
highly paid employees who are not directors be disclosed.
The Group deems this information to be sensitive and
has therefore only disclosed the remuneration of the
two executive directors.
BOARD OF DIRECTORSCorporate governance within Life Healthcare is managed
and monitored by a unitary board of directors and various
board sub-committees. The key principles underpinning
the governance of Life Healthcare are to ensure that the
Group conducts its business as a responsible corporate
citizen through the development and implementation of
strategies and policies that are integrated into every area
of its operations.
Board accountability
The board sets the strategic objectives of the Group,
determines investment policy and performance criteria,
and delegates to management the detailed planning and
implementation of policies in accordance with the appropriate
risk parameters. The board monitors compliance with policies
and achievement against objectives by holding management
accountable for its activities through quarterly performance
reporting and budget updates.
It considers issues of strategic direction, large acquisitions and
disposals, and approves major capital expenditure and financial
statements as well as matters having a material effect on Life
Healthcare. Board members are encouraged to debate and
challenge issues in an atmosphere of mutual respect
and cooperation.
The role of the board is regulated in a formal board charter
which defines its authority and power.
In accordance with its charter, the responsibilities of the
board include:
acting as a focal point for and custodian of corporate
governance;
identifying key performance and risk areas;
ensuring the Group’s strategy will result in sustainable
outcomes;
considering sustainability as a business opportunity that
guides strategy formulation;
approving the Group’s strategy and annual business plans;
ensuring that the Group’s ethics are effectively managed;
the governance of risk;
overseeing of IT governance;
assessing the impact of the Group’s business operations on
the environment; and
approval and adoption of Group policies, programmes
and procedures in relation to safety, health, economic,
social and environmental impacts, as well as remuneration
and benefits.
While retaining overall accountability, the board has
delegated authority to the chief executive officer to run the
day-to-day affairs of the Group. The board has also created
sub-committees to enable it to discharge its duties and
responsibilities properly and to fulfil its decision-making
process effectively. Each committee acts with appropriate
terms of reference. Board committees may take independent
professional advice at the Group’s expense when necessary.
Composition of the board
The board comprised 12 directors as at 30 September 2012.
The composition of the board included eight independent
non-executive directors; two non-executive directors; and
two executive directors reflecting an appropriate balance
between the executive and non-executive directors.
Professor Jakes Gerwel, a non-executive director, is chairman
of the board and in line with the King III Code, Trevor Munday
is the lead independent non-executive director. Michael
Flemming, an executive director, is the CEO.
The roles of chairman and CEO are not vested in the same
person and there is a clearly outlined division of responsibilities.
In compliance with JSE Listings Requirements, non-executive
directors do not participate in any share incentive or option
scheme of the Group.
The names of the directors as at 30 September 2012 as well as
their biographical details are set out on pages 22 and 23 of this
integrated annual report. No changes were made to the board
during the financial year ended 30 September 2012.
PAG E 59Life Healthcare - integrated annual report 2012
CORPORATE GOVERNANCE REPORT continued
Governance and accountabi l ity
The board ensures that no individual has unfettered powers
of decision making and authority, and that shareholder
interests are protected. The independent directors are Trevor
Munday, Louisa Mojela, Peter Golesworthy, Dr Peter Ngatane,
Adv Fran du Plessis, Ketso Gordhan, Joel Netshitenzhe
and Garth Solomon. The board considers that there is an
appropriate balance of knowledge, expertise and collective
experience among the non-executive directors.
Any new appointments to the board involve a formal and
transparent process and are a matter of consideration for the
full board, assisted by the nominations committee. When
appointing directors, the board considers its needs regarding
expertise, experience, diversity and number of members. The
articles of association stipulate that one-third of the board
members will retire from office at the annual general meeting
and will be eligible for re-election. The directors to retire are
those who have been longest in office since their last election
or appointment. The chief executive officer (CEO) and the chief
financial officer (CFO) are not subject to retirement by rotation
or taken into account in determining the rotation of retirement
of directors.
Effective control is exercised through the CEO, who is
accountable through regular reports to the board. The
non-executive directors are considered to have the skills
and experience to bring unrestrained judgement to bear on
issues of strategy, resources, transformation, diversity and
employment equity, standards of conduct, evaluation of results
as well as on economic, social and environmental policies.
Senior executives have access to board meetings as and
when necessary to apprise the directors of important events
and to devise strategy. This encourages interaction, good
communication and close cooperation between the directors
and executive management.
The board meets quarterly as well as on an ad hoc basis to
consider specific issues as the need arises. The board and
management meet annually to review strategy and agree areas
of focus and growth. Where directors are unable to attend
board meetings for any reason, every effort is made to obtain
and communicate to the meeting any comments they may
have regarding the agenda and general items. The board met
six times during the year and in addition attended a special
meeting focusing on the Group’s strategy.
Directors’ attendance at board meetings
Meetings
Board
meetings
Special
board# Board
Special
board# Board Board Board
Date 10.10.11 16.11.11 05.12.11 10.02.12 10.05.12 23.07.12
Members
MA Brey 6/6 1* 1 1* 1 1* 1
Adv F du Plessis 6/6 1* 1* 1* 1 1 1
CMD Flemming 6/6 1 1 1 1 1 1
Prof GJ Gerwel 6/6 1* 1 1* 1 1 1
PJ Golesworthy 6/6 1* 1 1* 1 1 1*
KM Gordhan 4/6 Apology 1 Apology 1 1 1
RJ Hogarth 6/6 1 1 1 1 1 1
LM Mojela 6/6 1 1 1* 1 1 1
TS Munday 5/6 1* 1 Apology 1 1 1
JK Netshitenzhe 4/6 Apology 1 Apology 1 1 1
Dr MP Ngatane 6/6 1 1 1 1 1 1
GC Solomon 5/6 1* 1 1* 1 Apology 1
* By teleconference.# Special meetings are called on an ad hoc basis and are not scheduled, directors consequently have not made provision for these meetings and may have
had prior commitments.
CORPORATE GOVERNANCE REPORT continued
Governance and accountabi l ity
PAG E 60 Life Healthcare - integrated annual report 2012
Directors are entitled, at the Group’s expense, to seek
independent professional advice regarding Group issues for
the furtherance of their duties. All directors have access to
the company secretary who is responsible for ensuring Group
compliance with applicable legislation and procedures.
Conflict of interests
The directors are required to avoid a situation where they may
have a direct or indirect interest that conflicts with the Group’s
interests. A conflict of interests policy ensures that directors
disclose conflicts of interest at every meeting in terms of
section 75 of the Companies Act 2008. In addition, directors
present an updated list of their directorships and interests to
the company secretary on an annual basis, or when a change
has occurred.
Induction of directors
On appointment, new directors are briefed on their fiduciary
duties and responsibilities by executive management.
New directors also receive information on the JSE Listings
Requirements and the obligations that they have to comply
with. Directors are informed of relevant new legislation and
changing commercial risks that affect the Group. The company
secretary assists the chairman with the induction of directors
and visits to selected Group hospitals.
Board self-evaluation
The board and sub-committee assessments and director
and chairman evaluations were undertaken in February 2012
through questionnaire-based assessments under the auspices
of the nominations committee. The overall results of the
assessments indicate that the board and sub-committees
were effective. Areas of improvement will be focused on in the
ensuing year and monitored by the nominations committee.
Board sub-committees
The board sub-committees consist of the:
audit committee
remuneration and human resources committee
nominations committee
risk committee
social, ethics and transformation committee and
investment committee.
Each sub-committee, with the exception of the nominations
and social, ethics and transformation committees, is chaired
by an independent non-executive director. Certain executives
are required to attend sub-committee meetings by invitation.
External auditors also attend the audit committee meetings.
The role of the board sub-committees is formalised by terms
of reference which define their authority and scope. During
the period under review, all sub-committee terms of reference
were reviewed and amended to align with the King III Code.
Audit committee
Members
Peter Golesworthy (chairman – independent non-executive
Adv Fran du Plessis (independent non-executive director) –
resigned as a member on 1 July 2012
Roles and responsibilities
The committee has an independent role with accountability
to both the board and shareholders. The overall function of
the committee is to assist the directors in discharging their
responsibilities relating to the safeguarding of assets, the
operation of adequate and effective systems and control
processes, and the preparation of the integrated report
and fairly presented financial statements in compliance
with all applicable legal and regulatory requirements and
accounting standards.
The committee performs the statutory duties on behalf of
all subsidiaries of the Group which do not have their own
audit committee. In addition, the committee monitors the
activities of the other audit and/or governance committees
within the Group.
The audit committee’s role is to ensure the integrity of the
integrated and financial reporting and audit processes, and
the maintenance of sound risk management and internal
control systems. It has a wide range of powers to consult both
internally and externally and must be provided with sufficient
resources to examine financial reporting and other strategic
issues according to its written terms of reference, as confirmed
by the board.
In pursuing these objectives, this committee inter alia:
monitors the integrity of the annual and interim financial
statements and external financial reports;
oversees relations with the external auditors, and reviews
the effectiveness of the internal audit function;
considered and recommended the internal audit charter for
approval to the board;
evaluates the findings of internal and external audits, the
actions taken, the adequacy of the systems of internal
financial and operational control, reviews accounting
policies and financial information issued to stakeholders;
recommends to the board, for approval by shareholders,
the selection of the Group’s external auditors, approves
the remuneration and terms of engagement of the
external auditors, considers and pre-approves non-audit
services and monitors the external auditors’ independence
and effectiveness;
reviews the integrated report to ensure that it is reliable
and does not conflict with the financial information, and
recommends the integrated report for approval to the
board; and
has the authority to seek information it requires from
any employee.
As set out in the report of the audit committee, contained in
the annual financial statements, the committee confirmed for
the 2012 financial year that it functioned in accordance with
its terms of reference.
The audit committee met five times for the period
under review.
PAG E 61Life Healthcare - integrated annual report 2012
CORPORATE GOVERNANCE REPORT continued
Governance and accountabi l ity
Directors’ attendance at audit committee meetings
Meetings
Audit
meetings
attended Audit
Special
audit# Audit Audit Audit
Date 14.11.11 05.12.11 26.01.12 03.05.12 23.07.12
Members
Adv F du Plessis1 3/4 Apology 1* 1 1*
PJ Golesworthy 5/5 1 1* 1 1 1*
LM Mojela 5/5 1 1* 1 1 1
TS Munday 3/5 1 Apology 1 Apology 1
1 Resigned as a committee member on 1 July 2012.* By teleconference.# Special meetings are called on an ad hoc basis and are not scheduled, directors consequently have not made provision for these meetings and may have
had prior commitments.
The audit committee reports its activities and makes recommendations to the board. The audit committee is satisfied that the external auditors are independent of the Group and that the CFO has appropriate experience and expertise.
Roles and responsibilitiesThe role of the committee is to assist the board to ensure that the Group has a clearly articulated remuneration philosophy and that:
the design and implementation of remuneration structures are consistent, fair, legally compliant and equitable;the Group remunerates employees and executives fairly and responsibly, taking appropriate cognisance of short-, medium- and long-term remuneration approaches and in ways that suitably recognise the interests of both employees and shareholders; and the disclosure of non-executive director and executive director remuneration is accurate and transparent.
The remuneration and human resources committee inter alia:oversees the establishment and implementation of remuneration policies;
assesses and reviews employee short-term and long-term incentive schemes and performance bonuses;reviews the salary mandate on an annual basis and makes recommendations to the board in this regard;considers management proposals in respect of fees for non-executive directors, which are tabled for shareholder approval at the annual general meeting; determines executive and staff participation in the long-term incentive schemes; andconsiders and makes recommendations to the board in respect of retirement fund matters.
This committee determines the framework, policy and costs of executive and senior management remuneration. The committee strives to achieve adequate, competitive and fair compensation in recognising and rewarding executive directors and senior employees to ensure their motivation and retention.
No person is involved in decisions as to his or her own remuneration. In fulfilling its duties, the remuneration and human resources committee pays due attention to succession plans and the retention of key executives.
The committee met four times for the period under review. In addition, a special joint meeting of the committee and the
nominations committee was convened.
Directors’ attendance at remuneration and human resources committee meetings
Meetings
Remuneration
meetings
attended Remuneration Remuneration
Special
remuneration Remuneration
Date 19.10.11 22.02.12 15.06.12 25.07.12
Members
LM Mojela 4/4 1* 1 1* 1
TS Munday 4/4 1 1 1 1
GC Solomon 3/4 Apology 1 1^ 1*
* By teleconference.^ By videoconference.
CORPORATE GOVERNANCE REPORT continued
Governance and accountabi l ity
PAG E 62 Life Healthcare - integrated annual report 2012
The committee evaluates such proposals and makes
appropriate recommendations to the board. Following
presentations to the board on annual budget parameters, the
committee considers and makes recommendations to the
board in respect of the annual budget and capital expenditure
for the Group.
The committee holds a minimum of two meetings a year
but meets if required to do so around major acquisitions
or disposals. The committee met twice during the period
PAG E 71Life Healthcare - integrated annual report 2012
Governance and accountabi l ity
RISK MANAGEMENT REPORT
The combined assurance model which was developed in
2011 by the group risk manager, serves as a formal platform
to facilitate the identification, prioritisation, assessment,
mitigation and monitoring of operating, financial and business
risks. The model was updated in the year under review. The
business unit managers, in conjunction with the group
risk manager and internal audit manager, are responsible
for implementing control processes and for providing the
necessary assurance that the controls are implemented and
maintained. Appropriate action plans ensure that significant
risks are reduced to acceptable levels.
The board, under advisement from the risk committee is
satisfied that there are adequate, ongoing risk management
processes in place, providing reasonable assurance that key
risks are professionally identified, evaluated and managed.
The following risks have been identified specifically related to
conducting business in southern Africa and India.
Risk Description of risk Risk mitigation Responsible committee
Regulatory
environment
The healthcare industry
is subject to government
regulations relating to licences,
conduct of operations, security
of medical records, quality
standards and certain categories
of pricing
The healthcare industry is
also subject to a number of
new/proposed regulations to
the Labour Relations Act, Basic
Conditions of Employment Act,
EE Act and the Employment
Services Bill (ESB)
The Group closely monitors and
provides input where possible in
any new proposed legislation
The Group has a team of
individuals working on health
policy-related issues and
interacting with industry
stakeholders
The Group does pertinent
company and industry research
and analysis to assist in the
debate regarding any proposed
legislative initiatives
Risk committee
National Health
Insurance (NHI)
The government released a
green paper on NHI in August
2011. The green paper provided
a high level strategic direction
of the NHI and did not provide
sufficient detail of how the NHI
would be implemented. The
funding proposals are expected
to be made known in early 2013
The Group continues to monitor
developments and will engage
with stakeholders where
appropriate
The Group responded to
the green paper, both as an
individual organisation as well as
through the Hospital Association
of South Africa (HASA)
The Group will prepare for NHI
accreditation at appropriate Life
Healthcare facilities
Risk committee
Proposed
Competition
inquiry
into private
healthcare costs
The Competition Commission
is considering an inquiry into
private healthcare industry
prices. The terms of the inquiry
have not yet been released but
the inquiry is expected to last
at least two years and cover the
major cost drivers in the industry
and benchmark our costs
internationally
The Group continues to
monitor developments and will
engage with the Competition
Commission when appropriate
The Group will do pertinent
company and industry
research and analysis to assist
in the inquiry
Risk committee
Governance and accountabi l ity
PAG E 72 Life Healthcare - integrated annual report 2012
RISK MANAGEMENT REPORT continued
Risk Description of risk Risk mitigation Responsible committee
Doctor
shortages
Doctors are not employed by
the Group and may terminate
their association with the
Group at any time
Insufficient doctors are being
trained to address the health
needs of, and general shortage
in, the country
The Group maintains strong
relationships with its doctors
and strives to provide quality
infrastructural and nursing
support as well as high
technology facilities and
equipment to attract and
retain doctors
The Group is significantly
increasing its funding for the
training of specialists through
the College of Medicines in a
R78 million, six-year programme
The Group’s doctor shareholding
model results in increased
doctor involvement
Risk committee
Skilled
personnel
shortages
South Africa has an increasing
shortage of nurses, pharmacists
and other healthcare
professionals
The effect of HIV/Aids on staff
The Group offers competitive
pay, an ESP, opportunities
for career advancement and
ongoing training through
the Life College of Learning.
These benefits have assisted in
employee retention
1 250 nursing students are
enrolled at the Life College of
Learning this year
A total of 72 pharmacist
assistants are training with
the Group with an additional
15 pharmacist interns in
Group pharmacies
The Group supports staff via a
variety of wellness programmes,
including HIV/Aids education
and support
Remuneration and human
resources committee
Poor investment
decisions
Poor investment decisions
(local and offshore) may impact
the Group’s growth and/or
financial stability
Offshore investments have
additional uncertainty and
unknown factors
The Group’s strategy and
development team manages
all investments, including due
diligence reviews, review by the
executive committee, approval
of material investments by the
board investment committee
and professional legal and tax
advice obtained
Post-investment reviews for
all material investments are
undertaken
Investment committee
PAG E 73Life Healthcare - integrated annual report 2012
Governance and accountabi l ity
RISK MANAGEMENT REPORT continued
Risk Description of risk Risk mitigation Responsible committee
Competition
from other
healthcare
providers
The Group competes for
patients with other providers
of medical services
The Group competes
successfully by maintaining
close relationships with medical
schemes and by driving cost
efficiency to secure preferred
network agreements
The Group also continues to:
– improve its geographical
coverage of hospitals as
well as adding new lines
of business
– invest in facilities and
equipment to support
the delivery of world-class
healthcare
– build on its quality
programme and
benchmark against
international best practices
Risk committee
Payments from
government
Life Esidimeni operates
under contract to Provincial
Departments of Health and
Social Welfare and is dependent
on payments which are
sometimes delayed
A small percentage of the
Group’s hospital revenue
comes from compensation
for occupational injuries and
diseases (COID)
Government contracts are
monitored carefully and
targets for payments are set
We have a centralised COID
office. Payments are monitored
on a monthly basis and regular
meetings are conducted with
representatives of COID
Audit committee
Equipment and
facilities
The Group must remain abreast
of advancements in medical
technology and equipment
needs or will lag in healthcare
delivery
The Group continues to
ensure that there are facilities,
technology and equipment
to attract doctors, nurses and
patients in order to achieve
the Group’s growth, efficiency
and sustainability strategies.
A total of R752 million has been
allocated for capital expenditure
in 2013
Risk committee
Industrial action Strikes or industrial action could
impair the Group’s business
activities
Negotiations with unions occur
at four acute facilities. There
were no strikes during 2012.
The Group has established
consultative forums and open
channels of communication
including conducting employee
climate surveys to maintain
good relations with employees
Remuneration and human
resources committee
Governance and accountabi l ity
PAG E 74 Life Healthcare - integrated annual report 2012
RISK MANAGEMENT REPORT continued
Risk Description of risk Risk mitigation Responsible committee
Information
technology
Information management could
be compromised by viruses or
data corruption, posing a threat
to the business
The Group’s operations are
dependent on uninterrupted
performance of information
systems; their failure could
disrupt business operations
The Group achieved the
international lSO 27001
information security
management system
certification some years ago
and external agencies conduct
regular ISO audits to maintain
the certification
The Group regularly reviews
its information management
technology and upgrades this
where necessary to ensure
optimal business efficiencies
The Group has pursued a
strategy of using only
“main-stream” products
Risk committee
Operational
risks
Risks related to dependence on
suppliers of essential services,
eg laundry, medical waste,
water, electricity as well as
environmental issues
Preferred suppliers are selected,
screened and regularly
monitored and reviewed
Back-up and alternative
response plans are in place to
mitigate outages
Risk committee
Patient lawsuits The Group is subjected
to lawsuits resulting from
negligence, treatment errors
and other claims
The Group has extensive
programmes, including ISO 9001
quality certification, to mitigate
the risk
The Group has also taken out
adequate insurance to cover
potential losses
Risk committee
Quality If the Group does not maintain
and continuously improve
the quality of the healthcare
provided, business operations
may be affected
Systems are in place to manage
the quality of care provided to
patients including international
benchmarking
The Group has achieved multi-
site ISO 9001:2008 certification
and developed a quality
scorecard which measures:
– Patient satisfaction
– Quality audit results
– Patient health and safety
– Employee health and safety
– Clinical outcomes
improvement
Risk committee
Real estate
management
If the real estate of the Group is
not well managed, it may lead to
adverse financial implications
The Group’s property is
managed using appropriate
property software involving the
Group risk, engineering and
legal departments
The Group has acquired several
previously leased premises
Risk committee
PAG E 75Life Healthcare - integrated annual report 2012
Governance and accountabi l ity
RISK MANAGEMENT REPORT continued
Risk Description of risk Risk mitigation Responsible committee
Reputational
risk
Adverse events and incidents
may lead to a decline in
confidence as a trusted health
service provider by patients and
supporting doctors
There is a policy and plan
to deal with incidents and
adverse events
Staff are trained in respect of
quality and Company protocols
to ensure these are followed
in the provision of services to
patients and supporting doctors
Risk committee
Credit risk The majority of hospital bills
are paid by medical schemes
to which the Group’s patients
belong. In South Africa,
medical schemes are subject
to regulation by the Council
of Medical Schemes and are
required to maintain reserves
of 25%
A range of corporate employers
under contracts in the
occupational health business
The Group has a well established
and protocol driven case
management system in each
hospital to manage all medical
scheme patients and interaction
with the private medical insurer
The Group verifies patients’
medical scheme coverage to
confirm if accounts will be paid
Management makes provision
for potential losses during
the year
Private (self-funding) patients
pay deposits upfront or make
payment arrangements prior
to admission
Audit committee
Liquidity risk The Group must maintain
sufficient cash, marketable
securities and working capital
facilities with banks
The Group monitors its facilities
to ensure it has sufficient
facilities to meet its operating
requirements
Cash flow position is monitored
monthly and forecasts done
quarterly to ensure that
adequate facilities are available
Audit committee
Interest rate risk The Group’s working capital and
loan facilities bear interest at
variable rates
The Group analyses its interest
rate exposure, taking into
consideration refinancing,
renewal of existing positions,
alternative financing and
hedging. Interest rate hedges
are used to manage exposure to
this risk
Audit committee
Foreign
exchange risk
Pharmaceuticals, surgical
supplies and medical equipment
are generally imported. Although
prices are denominated in rand,
the rand prices are linked to
US dollars or euros. The Group
has a hospital in Botswana and
is exposed to foreign currency
movements there
The Group has limited foreign
exchange risk. Group policy is
to take forward cover on any
material currency exposure.
Local suppliers are required to
quote prices in rand
Audit committee
Governance and accountabi l ity
PAG E 76 Life Healthcare - integrated annual report 2012
GRI REPORT
Profile disclosure Description Section Page
1. STRATEGY AND ANALYSIS
1.1 Statement from the most senior decision-maker of the organisation. Chairman’s statement, Chief executive officer’s review
26
28
1.2 Description of key impacts, risks, and opportunities. Risk management report 71
2. ORGANISATIONAL PROFILE
2.1 Name of the organisation. Scope and boundary of report, Administration
186
2.2 Primary brands, products, and/or services. Group overview 2
2.3 Operational structure of the organisation, including main divisions, operating companies, subsidiaries, and joint ventures.
Group overview, Annexures A and B
2165
2.4 Location of organisation’s headquarters. Group overview, Administration
286
2.5 Number of countries where the organisation operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report.
Scope and boundary of report,Group overview
12
2.6 Nature of ownership and legal form. Scope and boundary of report, Annexure C
1170
2.7 Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries).
Group overview 2
2.8 Scale of the reporting organisation. Group overview, Chief executive officer’s review, Chief financial officer’s review, Annexure C
2
28
32170
2.9 Significant changes during the reporting period regarding size, structure, or ownership.
Group overview, Chief executive officer’s review, Annexure C
2
28170
3. REPORT PARAMETERS
3.1 Reporting period (eg fiscal/calendar year) for information provided. Scope and boundary of report 1
3.2 Date of most recent previous report (if any). Scope and boundary of report 1
3.3 Reporting cycle (annual, biennial, etc.) Scope and boundary of report 1
3.4 Contact point for questions regarding the report or its contents. Scope and boundary of report 1
3.5 Process for defining report content. Scope and boundary of report 1
3.6 Boundary of the report (eg countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers).
Scope and boundary of report, Group overview, Annexures A and B
12
165
3.7 State any specific limitations on the scope or boundary of the report (see completeness principle for explanation of scope).
Scope and boundary of report 1
3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organisations.
Notes to the Group annual financial statements 98
3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.
Scope and boundary of report 1
3.12 Table identifying the location of the standard disclosures in the report. GRI report 76
3.13 Policy and current practice with regard to seeking external assurance for the report.
Report overview (Assurance) 1
PAG E 77Life Healthcare - integrated annual report 2012
Governance and accountabi l ity
GRI REPORT continued
Profile disclosure Description Section Page
4. GOVERNANCE, COMMITMENTS AND ENGAGEMENTS
4.1 Governance structure of the organisation, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight.
Corporate governance report 58
4.2 Indicate whether the Chair of the highest governance body is also an executive officer.
Corporate governance report (composition of the board) 58
4.3 For organisations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members.
Corporate governance report (composition of the board) 58
4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.
Corporate governance report,Stakeholders
5857
4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organisation΄s performance (including social and environmental performance).
Remuneration report 66
4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided.
Corporate governance report (conflict of interest) 60
4.7 Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organisation’s strategy on economic, environmental and social topics.
4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, social performance and the status of their implementation.
Group overview, Corporate governance report (code of ethics)
2
64
4.9 Procedures of the highest governance body for overseeing the organisation’s identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles.
Corporate governance report (social, ethics and transformation committee); (risk committee)
6364
4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance.
Corporate governance report 58
4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organisation subscribes or endorses.
4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organisations in which the organisation:
has positions in governance bodies; participates in projects or committees; provides substantive funding beyond routine membership dues; or views membership as strategic.
Sustainability report 46
4.14 List of stakeholder groups engaged by the organisation. Sustainability report (stakeholders) 56
4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.
Sustainability report (stakeholders) 56
4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organisation has responded to those key topics and concerns, including through its reporting.
Sustainability report (stakeholders) 56
Governance and accountabi l ity
PAG E 78 Life Healthcare - integrated annual report 2012
GRI REPORT continued
G3 DMA Description Section Page
STANDARD DISCLOSURES PART II: DISCLOSURES ON MANAGEMENT
APPROACH DMAs
DMA EC Disclosure on Management Approach EC Growth 40
DMA EN Disclosure on Management Approach EN Sustainability report 46
DMA LA Disclosure on Management Approach LA Sustainability
(human capital and
relationship) 52
DMA SO Disclosure on Management Approach SO Sustainability report
(corporate social
Investment);
Corporate governance
(code of ethics)
55
64
DMA PR Disclosure on Management Approach PR Sustainability
(quality and clinical
governance) 47
Performance indicator Description Section Page
STANDARD DISCLOSURES PART III: PERFORMANCE INDICATORS
Economic
EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.
Group overview (statement of value added); Sustainability (corporate social investment)
18
55
EC3 Coverage of the organisation’s defined benefit plan obligations.
EC7 Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.
Sustainability (transformation) 52
EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement.
Sustainability (corporate social investment) 55
Environmental
EN4 Indirect energy consumption by primary source. Group overview (performance) 12
EN5 Energy saved due to conservation and efficiency improvements.
Sustainability (our commitment to the environment) 52
EN6 Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives.
Sustainability (our commitment to the environment) 52
EN8 Total water withdrawal by source. Group overview (performance) 12
EN22 Total weight of waste by type and disposal method. Group overview (performance) 12
PAG E 79Life Healthcare - integrated annual report 2012
Governance and accountabi l ity
GRI REPORT continued
Performance indicator Description Section Page
Social: labour practices and decent work
LA1 Total workforce by employment type, employment contract, and region.
Sustainability (human capital and relationships) 52
LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region.
Sustainability (employee health and safety) 50
LA8 Education, training, counselling, prevention, and risk-control programmes in place to assist workforce members, their families, or community members regarding serious diseases.
Sustainability (HIV/Aids)
55
LA11 Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.
Sustainability (employee empowerment and skills development) 53
LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity.
Board of directors; Sustainability (transformation) 52
Society performance indicator
SO1 Nature, scope, and effectiveness of any programmes and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting.
Sustainability (corporate social investment) 55
SO4 Actions taken in response to incidents of corruption. Corporate governance (code of ethics) 64
SO5 Public policy positions and participation in public policy development and lobbying.
Chairman’s review (regulatory environment) 26
Social: product responsibility
PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures.
Sustainability (quality and clinical governance) 47
PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes.
Sustainability (patient health and safety) 49
PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.
Sustainability (quality and clinical governance) 47
Governance and accountabi l ity
PAG E 80 Life Healthcare - integrated annual report 2012